National Treasury Drafts Strategy to Catch Tax Evaders

National Treasury and Economic Planning Ministry in Kenya has crafted a plan that will link the tax systems at the Kenya Revenue Authority(KRA) with data at the Integrated Population Registry, commercial banks, mobile phone companies as well as betting and gaming companies, and other third-party data sources.

The idea behind the National Treasury’s plan is to allow a seamless exchange of information for a complete view of the taxpayer’s economic transactions through big data analytics to drive compliance and effectively nab tax evaders.

In the draft Medium-Term Revenue Strategy 2024-25 to 2026-26 financial years, the National Treasury has sent invitations for comments from Government Departments and Agencies, the private sector, professional associations, non-governmental organizations, and individuals.

National Treasury Public Notice

According to a public notice on the National Treasury’s website, the Draft medium-term revenue strategy provides a framework for guiding tax reforms to enhance revenue collection over the medium term and improve the fiscal space to facilitate the Kenya Kwanza administration’s Bottom Up Economic Transformation Agenda.

This strategy paper aims to enable Kenya to raise tax revenue to GDP ratio from 13.5% in 2022/23 to 20% by the end of the 2026/27 financial year. It also plans to increase tax compliance, promote investments by removing market distortions as well, and align tax policies with Kenya Kwanza Government priorities.

The list of proposals in this draft document, available on the National Treasury’s website, includes a reduction in reduction in corporate income tax from 30.0% to 25.0%, re-introduce minimum turnover tax, a review of VAT threshold, an introduction of VAT on education & insurance services and review excise duty on petroleum products.

The strategy paper also intends to relook at the tobacco tax as well as excise duty on alcoholic beverages to base it on alcoholic content, introduce a motor vehicle circulation tax as well and introduce a carbon tax.

According to Prof Njuguna Ndung’u National Treasury and Economic Planning Cabinet Secretary, comments on the draft MTRS should be submitted to the Treasury no later than October 6th, 2023.

Source: kenyanwallstreet.com

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